Question

The decision for solving production mix problems involving multiple products and scarce

production resources should focus on:
A. gross profit of each product.
B. sales price of each product.
C. contribution margin per unit of scarce resource.
D. contribution margin of each product.

Answer 1

The decision in production mix problems should focus on the contribution margin per unit of scarce resource, as it indicates the profitability of producing each product relative to the usage of limited resources.

Step-by-step explanation:

When solving production mix problems involving multiple products and scarce production resources, the decision should focus on the contribution margin per unit of scarce resource.

This approach takes into account not only the profit on each product but also how the use of scarce resources affects the overall profitability.

The contribution margin per unit of scarce resource is the additional income generated by allocating one more unit of the scarce resource to a product, and it helps in prioritizing which products to produce within the constraints of limited resources.